The high cost of world oil at $41 a barrel
OPEC's latest price hikes carry a burden for the US and the world, far beyond the 7 or 8 cents a gallon they will add to the retail cost of gasoline and heating oil in this country.
By forcing families around the globe to spend more of their income to heat their homes, cook their food, and run their cars, price hawks within the 13 -nation OPEC oil cartel may tip many nations toward deeper recession and higher inflation.
Consumer spending is the engine that powers economies, not only in the United States and other rich industrial lands, but in the poorer countries of Asia, Africa, and Latin America.
When families have less money to spend on things other than fuel, food, and shelter, production of goods generally falters, people are laid off, and economic recession sets in.
In addition, it costs businessmen more to buy the fuel needed to manufacture and transport goods, with the result that retail price tags are higher and inflation is given an extra nudge.
To take two extremes:
* The mighty trading nations of Japan and West Germany both are experiencing large balance-of-payments deficits, because they must import almost all their oil and, in the case of Japan, food, and other raw materials as well.
* The world's poorest nations, already struggling to pay their oil-induced foreign debts, may have to shell out collectively another $10 billion in 1981 because of price hikes decreed by the Organization of Petro leum Exporting Countries (OPEC) at the end of 1980.
Giving point to all this is news that key members of OPEC are raisin the price of their oil by $3 to $4 a barrel. The cost of Libyan crude, for example, has risen to $41 a barrel. Nigerian crude has increased to $40 a barrel.
If Algeria follows Nigeria and Libya's action -- as it usually does -- and boosts the cost of its crude equivalently, almost one-third of all oil imported by the US will cost $41 a barrel, nearly triple the roughly $14.80 charged by these African producers only two years ago.
For the incoming Reagan adminstration, the price hikes pose a special problem. Marginally at least, the higher cost of oil slows down the economy, increases unemployment, threatens troubled companies like Chrysler, and boosts inflation.
The cumulative effect of all this is to increase federal spending for fuel for the US armed forces and for unemployment compensation and related costs. At the same time tax revenues, or government income, shrinks.
It may become harder than expected for Ronald Reagan and his team to cut the federal budget deficit, a key element in Mr. Reagan's effort to convince Americans that he can handle the nation's economic problems.
The latest OPEC price hikes coincide with higher US social security taxes, which will hit most American workers beginning Jan. 1, 1981.
Finally, the retail price of gasoline and heating oil will rise another 9 cents a gallon or so by next September, over and above what OPEC does, as price controls on domestic oil phase out -- or end all at once, if Reagan erases controls in one fell swoop.
Currently, world stocks of petroleum are high, which leads to the question: Can OPEC hawks make the latest price hikes stick?
"Yes, they can," says Lawrence Goldstein, a leading oil analyst. "Right now, it is true, there is more oil available than is necessary.
"But," he adds, "with OPEC now producing less than 24 million barrels a day, the surplus is not enough to prevent a possible tight market in the second and third quarters of